Northern Rock shareholders begin High Court appeal

Former investors seeking compensation are attempting to overturn an initial
judgment that found in favour of the Government.

Northern Rock's former shareholders will on Wednesday begin their appeal for compensation at the High Court. At the hearing, expected to last three days, they will attempt to overturn an initial judgment that found in favour of the Government over the terms of the Northern Rock compensation order.

When the bank was nationalised in February last year, the Treasury instructed independent valuers to assume that "Northern Rock is unable to continue as a going concern and is in administration". Shareholders claim the wording prejudices the independent review by accountants BDO Stoy Hayward and will result in minimal, if any, compensation. SRM Global, the largest shareholder, has contended they should receive 400p a share.

The three main appellants in the action are SRM, RAB Capital, and a group of private shareholders. It is also supported by Legal & General, the third largest institutional shareholder. They want a declaration that the instruction to the independent valuers is incompatible with the human rights principle that any state seizure of property must be balanced by fair compensation.